Buying A Catering Business

The purchase of an established, profitable catering business with a proven concept, a recognized trade name and a solid customer base offers the least amount of financial risk. Sales, expenses and profits can be verified during a "due - diligence" or inspection period.

Proven cash flows are usually sufficient to service normal debt and provide a reasonable managerial fee for the new owner. The acquisition of a successful ongoing catering operation usually requires the least capital outlay and operating capital, the fastest return of investment and the smallest chance of failure.

Many creative potential caterers have their own concept, menus, recipes and styles in mind, and want to open a new operation. But recent changes in building, traffic and health codes have resulted in skyrocketing site - planning and approval costs for opeing a new commercial kitchen location, and even operating from home can be an expensive proposition that might make it more appealing to acquire a going concern.

The least expensive option to a new start - up operation would be the purchase of an established restaurant, which could be converted to the new owner's concept and menu. Most marginal operations suffer from weak management and poor concepts; many successful caterers know that there is no such thing as a bad operation, just "bad concepts" and poor management!

Consider the following issues before deciding whether to open a new catering business or purchase a pre - existing one:

Location: Will the demographics and traffic patterns support the clientele that the proposed new concept will require? What is the availability of desirable commercial space in the area?

Leasehold improvements: Can I minimize my capital requirements by purchasing a pre - existing kitchen with minimum cosmetic changes? Are the mechanical systems and required equipment in good working order?

Is the current equipment going to meet your expected needs in terms of meal planning and preparation? Does it pass all inspections necessary to continue to operate, and will the package meet your needs with a minimum cash outlay for new equipment?

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